Cryptocharity —

Bitcoin makes bid for respect with new foundation

Bitcoin Foundation will support lead Bitcoin developer, organize conferences.

One of the traditional strengths of Bitcoin, the peer-to-peer cryptocurrency, has been its decentralization. Because no one is in charge of the network, users place their trust in the security of the Bitcoin protocol rather than in any specific institution.

Yet decentralization also has costs. So far, the management of the flagship Bitcoin client has largely been a volunteer effort. There's no one to field media inquiries or represent the Bitcoin community with policymakers. A group of Bitcoin luminaries hopes to change that by forming the Bitcoin Foundation.

The new organization is modeled on the Linux Foundation, a non-profit that employs Linux creator Linus Torvalds and represents the Linux platform to the broader world. A letter from Peter Vessenes, executive director of the freshly minted Bitcoin Foundation, notes that lead Bitcoin developer Gavin Andresen, "maintains the software and manages the core team without any compensation—or day job—beyond the joy of Bitcoin programming." Raising enough money to pay him a salary will be one of the foundation's first tasks.

The foundation is seeking support from both individuals and corporations. Donations are to be made in Bitcoins. The foundation's board represents several Bitcoin businesses, including the leading Bitcoin exchange Mt.Gox. Mt.Gox has pledged to be the foundation's first "platinum" corporate sponsor, paying dues of 10,000 BTC ($120,000) per year. Two other Bitcoin businesses, BitInstant and CoinLab, have pledged to become corporate members and have seats on the board.

In addition to supporting the development of the Bitcoin software, Vassenes says the foundation will organize a Bitcoin conference in Silicon Valley in 2013 and will "publish a set of best practices for businesses transacting in Bitcoin, covering topics from accounting to physical and digital security."

The Bitcoin Foundation won't have any direct control over the Bitcoin network, which will continue to operate independent of any institution. But the foundation hopes to accelerate the network's growth by supporting both better software and broader public awareness.

45 Reader Comments

I think before bitcoin ever takes off they need to figure out how to protect their coins in these giant markets. You can watch the value of these things go up up up, then crash cause another one gets hacked. I like the idea and I use them myself but always at the time of purchase as I never feel secure having any type of real money on a system for more then a few days.

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

You can't anonymously mail cash to someone?

No... you can't.... your address very much ties you to a physical location very trackable.... not sure what you point was?

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

You can't anonymously mail cash to someone?

No... you can't.... your address very much ties you to a physical location very trackable.... not sure what you point was?

That's been a popular means of sending currency anonymously forever now. Drop the letter in a public mailbox with no return address to some random PO Box.

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

You can't anonymously mail cash to someone?

No... you can't.... your address very much ties you to a physical location very trackable.... not sure what you point was?

That's been a popular means of sending currency anonymously forever now. Drop the letter in a public mailbox with no return address to some random PO Box.

I misunderstood and missed your point, yes you'd be correct. It would be an incredibly unsafe way to get services, problem is no business is going to use this model. I'm talking about legal digital goods, donations ect.. Cash in the mail isn't going to work for any of that.

The problem with state backed currency nowadays is that the government can just print more whenever they want it. In the old days, every dollar had an equivalent amount of gold represented in a safe somewhere, that way there was actually value to the currency. These days the president funds things by running the printers at full speed. Bitcoin is a limited resource by design, sort of like gold. People have found the low hanging fruit, and people are digging and digging, trying to find the rest of it, but it is a slow and difficult process, and should get slower and more difficult as time goes on. This prevents the market being flooded with currency and drastically upsetting the market values of items. The only reason Bitcoin has as much fluctuation as it does these days is because people freak out when bank robberies happen and they try to sell all their bitcoins at once, selling them for 'real' money. It has nothing to do with the currency or its design, it has to do with people being panicky and not securing their stuff properly.

The problem with state backed currency nowadays is that the government can just print more whenever they want it. In the old days, every dollar had an equivalent amount of gold represented in a safe somewhere, that way there was actually value to the currency. These days the president funds things by running the printers at full speed. Bitcoin is a limited resource by design, sort of like gold. People have found the low hanging fruit, and people are digging and digging, trying to find the rest of it, but it is a slow and difficult process, and should get slower and more difficult as time goes on. This prevents the market being flooded with currency and drastically upsetting the market values of items. The only reason Bitcoin has as much fluctuation as it does these days is because people freak out when bank robberies happen and they try to sell all their bitcoins at once, selling them for 'real' money. It has nothing to do with the currency or its design, it has to do with people being panicky and not securing their stuff properly.

you are 100% correct but that doesn't mean that this is any less of a problem =/ people won't use a currency that can half in value in a few hours. This has a little to do with volume but a lot more to do with trust. I won't use an exchange or store any amount on a computer for more then a few days, and with break in happening everywhere, not just bitcoin exchanges, it's clear it's not a simple problem.

There is nothing about bitcoin that is respectable nor trustworthy. That's the fundemental problem with non-State backed money. All the Cryptography in the world won't change that.

It also provides anonymity that state backed money can't provide which is another fundamental problem people are trying to solve. There is no reason in the world that they can't co-exsist and server different purposes imo.

You can't anonymously mail cash to someone?

No... you can't.... your address very much ties you to a physical location very trackable.... not sure what you point was?

That's been a popular means of sending currency anonymously forever now. Drop the letter in a public mailbox with no return address to some random PO Box.

I misunderstood and missed your point, yes you'd be correct. It would be an incredibly unsafe way to get services, problem is no business is going to use this model. I'm talking about legal digital goods, donations ect.. Cash in the mail isn't going to work for any of that.

Bitcoins are no safer. You basically have to take the other guy at his word that the address he provides is legit, there's no way to check it.

you are 100% correct but that doesn't mean that this is any less of a problem =/ people won't use a currency that can half in value in a few hours. This has a little to do with volume but a lot more to do with trust. I won't use an exchange or store any amount on a computer for more then a few days, and with break in happening everywhere, not just bitcoin exchanges, it's clear it's not a simple problem.

Running a secure website isn't that hard, it's just that Bitcoin website operators are tremendously incompetent.

Running a secure website isn't that hard, it's just that Bitcoin website operators are tremendously incompetent.

Very much this - the bitcoin website operators have not, apparently, understood that they are running banking websites, subject to the same attacks and threats as banking websites.

The fact that people are breaking in and stealing bitcoins does indicate that they have some value, though. You don't go robbing banks for worthless items. In a way, it's demonstrating that bitcoin *is* relevant.

It is. It's why your ISP accepts it as payment for your net connection, and why you expect that your ISP will still accept it next month and next year. Popular to what some believe, there is no law that forces private individuals and companies to settle all transactions in dollars. There is a law that forces you to pay the state a certain percentage of your profits (this must be settled in dollars), but the method of payment in the original transaction is both immaterial, undefined, and within the rights of the indivdiuals to decide.

Going big picture, do you think China would have bough a trillion dollars of US debt (which pays out solely in US$ and will do so with a dismal return of 1-2%) if it didn't trust that they'd get their money back?

Your statement is lazy cynicism at its finest. It is very easy to sit back and lob generic insults at something you don't understand because any explanation for why the world works the way it does takes more time than most people are willing to expend and far more effort than what you put into your attack.

Running a secure website isn't that hard, it's just that Bitcoin website operators are tremendously incompetent.

Very much this - the bitcoin website operators have not, apparently, understood that they are running banking websites, subject to the same attacks and threats as banking websites.

The fact that people are breaking in and stealing bitcoins does indicate that they have some value, though. You don't go robbing banks for worthless items. In a way, it's demonstrating that bitcoin *is* relevant.

Sure, Bitcoins come pre-fenced and with services to convert them into local currency. They're basically like stealing cash.

Sure, Bitcoins come pre-fenced and with services to convert them into local currency. They're basically like stealing cash.

I think you're looking for "pre-laundered". Laundered money is cash that can't be traced back to prior criminal activity and is "clean" enough to be deposited into the legitimate banking system without begging questions of where it came from.

It would be akin to 20th century mafiosos that would hide their bootlegging profits by owning construction companies and cooking the books to hide the gains. It's not theft, it's accounting fraud used to cover more serious crimes. A BC criminal could fence stolen property, sell drugs, or illegal items (guns), and the anonymous system of BC launders his profits immediately so he can cash out and deposit the funds in his bank (and spend those dollars) without having to wait a month for the books to get cooked.

A fence is a middleman who knowingly deals in stolen goods. He takes custody of the property and interacts with the actual thieves. It's similar in that the fence legitimizes illegitimate assets, but he deals with the actual good, not finances resulting thereof. Other people could take issue with the fact that stolen property is never legitimate, but that it is perfectly fine to deal in goods that they deem non-harmful even if they defy statutes. Selling/buying pot is fine. Stealing someone else's pot is wrong.

Neither Congress, the USPS or ICE ban the mailing of cash to anyone, anonymous or otherwise. ICE, Secret Service, etc. can examine the cash, but unless they have proof that it came from an illegal activity (using the mail for ANY criminal activity is a felony) they will send it on its way when they're done. In fact, the USPS will send a money order without requiring a "to" or "from" FOR you.

However, sending cash through the mail (or sending a money order without a "to") is just a really, really, really stupid idea. That's why no one does it.

Also, if you send $5,000+ without identifying it to the USPS beforehand (like, by insuring the package), or receive such a package, expect a call from your local FBI or DEA office. There may be IRS issues down the road as well.

Bit coin is genius. The creators were probably sitting around a table and saying "hey, let's create a currency with all the disadvantages of gold, exct, we won't even give it backing with gold. It will be perfect!" The only reason it sees any interest is because of illegal drugs and stupid Internet libertarians, who believe it protects them from inflation, even after they have seen inflation over 1200% followed by massive deflation followed by massive inflation.

Bit coin is genius. The creators were probably sitting around a table and saying "hey, let's create a currency with all the disadvantages of gold, exct, we won't even give it backing with gold. It will be perfect!" The only reason it sees any interest is because of illegal drugs and stupid Internet libertarians, who believe it protects them from inflation, even after they have seen inflation over 1200% followed by massive deflation followed by massive inflation.

It's also popular with speculators. Not really a sign of a sound, reliable currency.

Bit coin is genius. The creators were probably sitting around a table and saying "hey, let's create a currency with all the disadvantages of gold, exct, we won't even give it backing with gold. It will be perfect!" The only reason it sees any interest is because of illegal drugs and stupid Internet libertarians, who believe it protects them from inflation, even after they have seen inflation over 1200% followed by massive deflation followed by massive inflation.

It also allows you to steal from many people with absolutely no repercussions whatsoever. Its perfect!

I wouldn't trust it as a form of long term wealth storage at this point (maybe it will eventually stabilize enough that it could serve this purpose, but at this point I would consider it more of a speculative investment than a wealth storage medium).

It seems to have proven itself quite useful as an anonymous transactional currency though. While it has certainly been useful to people engaging in illegal activities, there are also some legitimate reasons why someone might want to anonymize their transactions, and I like the fact that it provides alternative options for payment that are not subject to being blocked by banks and credit card processing companies at the request of the government or private industry groups.

Expecting it to be a replacement for government currency is unrealistic, but it is useful in certain niches.

It is. It's why your ISP accepts it as payment for your net connection, and why you expect that your ISP will still accept it next month and next year. Popular to what some believe, there is no law that forces private individuals and companies to settle all transactions in dollars. There is a law that forces you to pay the state a certain percentage of your profits (this must be settled in dollars), but the method of payment in the original transaction is both immaterial, undefined, and within the rights of the indivdiuals to decide.

Going big picture, do you think China would have bough a trillion dollars of US debt (which pays out solely in US$ and will do so with a dismal return of 1-2%) if it didn't trust that they'd get their money back?

Your statement is lazy cynicism at its finest. It is very easy to sit back and lob generic insults at something you don't understand because any explanation for why the world works the way it does takes more time than most people are willing to expend and far more effort than what you put into your attack.

The problem here is you are comparing a nascent currency vs the two largest economies of the world. When you have a currency like Bitcoin, its overall value can change quickly due to single events. However, as more people use it, it becomes more stable, take a look at the graph of Bitcoin vs USD for the last year. Doesn't look so bad, does it? The year previous to that was a complete mess, huge peaks and valleys, so the currency is stabilizing.

Going really big picture, as in taking into account all the other countries, it's safer to store value in bitcoins than in Bolívares (Venezuela) or Belarussian rubles (Belarus obviously), even if both of those currencies are state backed. Actually, in the case of Belarus, it's even safer to bet half your dollars on a coin toss than converting all of it to rubles, given that it is pretty much guaranteed to lose more than 50% of its value over a year if you do that. The fact that a currency is backed by a state doesn't mean it will hold value over time, as you seem to imply with the China's debt purchasing example. It also doesn't mean it is to be trusted or respected automatically. I don't think you give the bolívar the same trust and respect you give the dollar. If both are backed by a state, what is difference, why would you trust one more than the other? At what point does it cross the line of "I would trust it more even if there was no country behind it"? It is indeed more convenient to carry on with business inside a state using the official currency, but it'll be fun to see how that changes and what will a country do when bitcoin use gets important enough within its borders compared to the official currency.

Bit coin is genius. The creators were probably sitting around a table and saying "hey, let's create a currency with all the disadvantages of gold, exct, we won't even give it backing with gold. It will be perfect!" The only reason it sees any interest is because of illegal drugs and stupid Internet libertarians, who believe it protects them from inflation, even after they have seen inflation over 1200% followed by massive deflation followed by massive inflation.

The problem with state backed currency nowadays is that the government can just print more whenever they want it.

Feature not a bug. Its kind of nice not having a deflationary period every 5 years.

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In the old days, every dollar had an equivalent amount of gold represented in a safe somewhere, that way there was actually value to the currency.

Gold has no intrinsic value that government backed money does not have. Gold to me has next to zero value. While cash on the other hand has a lot of value. I can go to my grocery store and exchange cash for dinner cant do that with gold.

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These days the president funds things by running the printers at full speed.

Wow. Not surprising a gold bug does not understand how the budget works but wow. Congress funds things not the president. Even if you are trying to hint that its the treasury that pays for the things that congress told it to (which you are not) by law the president cant stop it even if he wanted to.

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Bitcoin is a limited resource by design, sort of like gold. People have found the low hanging fruit, and people are digging and digging, trying to find the rest of it, but it is a slow and difficult process, and should get slower and more difficult as time goes on.

Why on earth would you want your means of transactions to be a limited resource by design? Money is not intended to be an investment vehicle. Money is a means to make a market transaction.

Just think how awesome it would be when company A has the products and wants to sell them and person/company B has the desire and ability to produce equivalent value for those products but because gold is being horded that day the transaction could not take place. Yeah gold.

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The only reason Bitcoin has as much fluctuation as it does these days is because people freak out when bank robberies happen and they try to sell all their bitcoins at once, selling them for 'real' money. It has nothing to do with the currency or its design, it has to do with people being panicky and not securing their stuff properly.

No that is not the only reason or even main reason. The reason is simple bitcons you cant actually buy anything legal with bitcons. This will never change because the only people that will jump into this market are goldbug types.

Feature not a bug. Its kind of nice not having a deflationary period every 5 years.

Are you enjoying that $4 gas and $3.99 milk? When was the last time you were in a grocery store? LOL

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Gold has no intrinsic value that government backed money does not have. Gold to me has next to zero value. While cash on the other hand has a lot of value. I can go to my grocery store and exchange cash for dinner cant do that with gold.

Tell this to every fiat currency holder in history after the fiat currency was devalued (and that is every single one). At the same time you could always sell your gold at current market rate for whatever paper that was being used at the moment.

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Wow. Not surprising a gold bug does not understand how the budget works but wow. Congress funds things not the president. Even if you are trying to hint that its the treasury that pays for the things that congress told it to (which you are not) by law the president cant stop it even if he wanted to.

The problem here is you are comparing a nascent currency vs the two largest economies of the world. When you have a currency like Bitcoin, its overall value can change quickly due to single events. However, as more people use it, it becomes more stable, take a look at the graph of Bitcoin vs USD for the last year. Doesn't look so bad, does it? The year previous to that was a complete mess, huge peaks and valleys, so the currency is stabilizing.

The size of bitcoins is the equivalent of a town of maybe 5000 people. The stability if you want to call it that of bitcoins over the last year comes down to its small size and people not actually using it. A small position would send the prices all over the map both going in and going out of the position.

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Going really big picture, as in taking into account all the other countries, it's safer to store value in bitcoins than in Bolívares (Venezuela) or Belarussian rubles (Belarus obviously), even if both of those currencies are state backed. Actually, in the case of Belarus, it's even safer to bet half your dollars on a coin toss than converting all of it to rubles, given that it is pretty much guaranteed to lose more than 50% of its value over a year if you do that. The fact that a currency is backed by a state doesn't mean it will hold value over time, as you seem to imply with the China's debt purchasing example. It also doesn't mean it is to be trusted or respected automatically. I don't think you give the bolívar the same trust and respect you give the dollar. If both are backed by a state, what is difference, why would you trust one more than the other? At what point does it cross the line of "I would trust it more even if there was no country behind it"? It is indeed more convenient to carry on with business inside a state using the official currency, but it'll be fun to see how that changes and what will a country do when bitcoin use gets important enough within its borders compared to the official currency.

I purchase a 1,000,000 position in a 10 year T I know in tens years I will get 1 million dollars from the US government. It might have a lessor or greater purchase power be it from inflation or the strength of the dollar but the key point is I have 1 million dollars. The same is true for most countries that issue their own currency. You mention Belarus the ruble their is going though a rollercoaster because of currency pegging issues which is creating uncertainty in other words I don't know if in 10 years Belarus will be on their ruble, the Russian ruble, or the US dollar.

The problem here is you are comparing a nascent currency vs the two largest economies of the world.

No, the problem is that no one backs BCs. The federal government will ALWAYS accept dollars as a way of settle tax, custom and legal issues. Things you have to do as an American citizen. There is no one out there that will take BCs no matter what. There is no stability without a backstop like that. You think things were bad after Lehman collapsed? The whole global economy seized up and the ONLY thing that kept it going was the US government and the Eurostates that promised to handle things.

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The fact that a currency is backed by a state doesn't mean it will hold value over time, as you seem to imply with the China's debt purchasing example.

You don't know what you're talking about. Currency isn't debt. A properly managed currency will depreciate by about 25-35% less than the economy grows. This is inflation and it spurs investment and spending, instead of hoarding dollars in your wallet or under your mattress. So if the US is growing at 3%, inflation will be 1-2% (.03*.75). If China is growing at 10%, the Yaun will lose 6-7%per year. Debt varies based on creditworthiness, but generally, AAA level debt (which includes the US regardless of what S&P thinks, because the day the US defaults is the day EVERYTHING goes to shit) with be somewhat higher than inflation.

Oh nos the hyper inflation. And I am shocked that my grocery bill is going up. It must be the QE's oh right never mind it was the drought that destroyed what is up to now 30 percent shortfall in soy and corn so far this year?

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Gold has no intrinsic value that government backed money does not have. Gold to me has next to zero value. While cash on the other hand has a lot of value. I can go to my grocery store and exchange cash for dinner cant do that with gold.

Tell this to every fiat currency holder in history after the fiat currency was devalued (and that is every single one). At the same time you could always sell your gold at current market rate for whatever paper that was being used at the moment.

What are you even trying to say here? Are you suggesting that gold would also have a purchase power for what 1772 dollars would buy today? Or are you saying that gold could be sold for then current market value at any time in history?

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Wow. Not surprising a gold bug does not understand how the budget works but wow. Congress funds things not the president. Even if you are trying to hint that its the treasury that pays for the things that congress told it to (which you are not) by law the president cant stop it even if he wanted to.

Please tell me that you are doing some kind of elaborate trolling here?

Those links have nothing to do with my comment you quoted. One of your fellow goldbugs suggested that it was the president that funds everything by running the printing press. I corrected him on how the budget worked. Those animated videos from youtube had exactly 0 to do with the budget process.

I know what you are hinting at though so I will let you try again in the future.

Tell this to every fiat currency holder in history after the fiat currency was devalued (and that is every single one). At the same time you could always sell your gold at current market rate for whatever paper that was being used at the moment.

Oh boy, we've got a Paulist. Paulists confuse the purpose of money. The purpose of money is NOT to be an investment, or a trade. Gold is a trade, and by basing one's currency on it, you trade lower inflation (but not no inflation, the dollar still lost 1-2% of its value per year) for price shocks. More recessions, more often, interspersed with more asset bubbles. You also have to pay to have people physically haul around gold and insure it from theft. It's a giant mess that isn't worth the 1% it knocks off inflation over the long haul (in the short term, you could have inflation AND deflation as great as 100% within a 10 year span).

Neither Congress, the USPS or ICE ban the mailing of cash to anyone, anonymous or otherwise. ICE, Secret Service, etc. can examine the cash, but unless they have proof that it came from an illegal activity (using the mail for ANY criminal activity is a felony) they will send it on its way when they're done. In fact, the USPS will send a money order without requiring a "to" or "from" FOR you.

However, sending cash through the mail (or sending a money order without a "to") is just a really, really, really stupid idea. That's why no one does it.

Also, if you send $5,000+ without identifying it to the USPS beforehand (like, by insuring the package), or receive such a package, expect a call from your local FBI or DEA office. There may be IRS issues down the road as well.

So you're unclear on the term "anonymous."

Say you want to send money to Julian Assange's legal defence fund. This is perfectly legal, even if Wikileaks itself isn't, but you don't want your government to know about it because of an entirely legitimate fear that they'll use quasi-legal (or even outright illegal) methods to punish you for holding the wrong politics.

1.00 BTC is equal to 1.00 BTC. You can't convert BTC to a fiat currency (US dollars) within the Bitcoin network. External money exchanges were developed after the network to allow this. The value of 1.00 BTC relative to US dollars is almost completely based on speculation. Currently, a large problem with bitcoin is speculators hoarding bitcoins. No economy can grow, stabilize, or prosper without a constant flow and exchange of money.

Also, Bitcoin is a semi-commodity based currency similar to gold. Unlike fiat currency that can be endlessly printed, bitcoins are created by solving some crazy mathematical problems. This is called bitcoin mining. These equations are quite complex and take tons of computing power to solve. That computing power costs in terms of heat and energy expended. By using modern GPU's as computing powerhouses, the cost bitcoin per kWh expended is near 1:1. This ratio can be increased with good server design and new forms of chips designed purely for bitcoin mining.

The network regulates itself to compensate for the added computing power over time and after distributing all the newly created bitcoins, there will be 21 million BTC in the system.

Also, bitcoin is completely anoymous, similar to RSA public-key encryption and works on similar principals. You are also allowed endless bitcoin address to send to, something unpractical in the real world.

Finally, if you were to delete your bitcoin wallet from your computer those BTC would be gone for forever. Just like burning cash.

No economy can grow, stabilize, or prosper without a constant flow and exchange of money.

Or without poor people who need to feed their families, so they go work for rich corporations that threaten their jobs if they don't participate in the best interest of their political motivations. The whole currency system thrives on imbalance and injustice, economic slavery to its core.

No economy can grow, stabilize, or prosper without a constant flow and exchange of money.

Or without poor people who need to feed their families, so they go work for rich corporations that threaten their jobs if they don't participate in the best interest of their political motivations. The whole currency system thrives on imbalance and injustice, economic slavery to its core.